My Plan

We know investing is very personal. Everyone has different goals, timeframes and levels of risk they're prepared to take so it's important to take a few moments to work out the risks associated with achieving the returns you want.

What do I need to consider?

It is important to plan your investment strategy to suit your specific investment needs – there are three key factors to consider in deciding whether a fund is right for you.

1. Your Investment Objectives

Everyone has different reasons for investing. Maybe you're saving to buy a house or investing to ensure you have a comfortable retirement. Whatever your situation, you need a clear understanding of your objectives before you can choose the right investment. Are you looking for capital growth, income, or a balance of the two?
Different funds offer a different mix of growth and income; some funds also offer the potential for tax effective income. Here's how your investment objectives could influence your choice of fund.

Growth	If your goal is to create medium to long-term wealth, then you are likely to be a growth-oriented investor. Growth funds can be single sector or multi sector funds.
Balanced	Balanced funds offer investors a mixture of income and capital growth. They are usually multi-sector funds with a diversified portfolio ranging across the different asset classes.
Income	If your aim is to live entirely off your investments, supplement your income or service a loan, you may be looking for a fund that makes regular income distributions. RaboDirect offers several funds that distribute income on a regular basis.

Matching Asset Classes To Your Objectives
Here's an overview of the different investment outcomes you might expect from investing in different asset classes.

Asset class	Income potential	Growth potential	Risk
Cash	Low	-	Low
Fixed interest	High	Low-Medium	Medium
Property	High	Medium	Medium
New Zealand shares	Medium	Medium-High	High
International shares	Low	High	High

Past performance is not a reliable indicator of future performance.

2. Your Investment Time Frame

Your investment time frame can be an important factor in deciding what kind of fund is best for you.

Growth assets, such as shares and property have historically offered higher returns over the long term but can be volatile over the short term. That can mean taking on more risk if you are a short-term investor. So, if you are investing for a short-term goal, such as a holiday, you may prefer a fund with a lower risk profile.

On the other hand, if you are investing for a medium-term or long-term goal, such as retirement, you will have more time to ride out short-term ups and downs, giving you the opportunity to benefit from the long-term growth potential of assets like shares and property. That means you may be more likely to consider a fund with a greater proportion of growth assets. Of course, your investment time frame is not the only thing to consider when making a decision.

The type of investments you make will also depend upon your appetite for risk, especially the risk of short-term loss. Investment Statements will often specify a time frame during which the fund manager believes a particular investment should be held - typically longer for higher risk assets, and shorter for lower risk assets.

3. Your Investor Risk Profile

Your choice of fund will also be affected by your investor risk profile, which is a combination of factors - your investment experience, your attitude to volatility, and your investment time frame.

Most investors fit into one of the following risk profiles:

Conservative
Moderate
Balanced
Growth
Aggressive

What about asset allocation?

Once you've worked out your risk profile you need to start considering where you are going to invest your assets. Understanding asset allocation and where your money is invested can be a big help when deciding on the right strategy for you.

Asset allocation describes where you choose to invest your money. For example, shares, property, cash or fixed interest.

Where you invest your money will depend on a few things like:

The returns you want to make
How long you want to invest for
Your long-term earning potential

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